Dell to open manufacturing plant in India

Dell has selected Chennai, the capital city of Tamil Nadu in southern India, as the location for its first PC manufacturing plant in the country.

It plans to begin manufacturing in India in the first half of next year, with an initial focus on the production of desktop computers, it said Thursday. Desktops account for about 70% of Dell's business in India.

The computer maker said in January that it would set up a manufacturing facility in India but hadn't picked a location at the time.

The plant is intended to serve the domestic market, though the company may consider exporting some of the computers in the future, said Rajan Anandan, Dell's vice president of India sales. The facility will be able to produce close to 400,000 PCs a year when it opens, increasing to 1 million units a year depending on the growth of Dell's business in India, he said.

Having a manufacturing facility in India will enable Dell to deliver products to customers there more quickly and also reduce its freight costs and import duties. Those savings would translate into lower prices for customers, he added

The cost of manufacturing in India is comparable to that in China or Malaysia, Anandan said.

Dell's shipments in India increased 82% in its most recent quarter, ended in August, while revenue grew 63%. However, the company still trailed behind rivals HP, Lenovo and local vendor HCL Infosystems., according to IDC (India).

As in other areas where it has set up manufacturing plants, the company expects the new facility to create an ecosystem of suppliers around Chennai to provide components and other parts required for computer manufacture, Anandan said.

"We will move quickly to making our other products, including servers, notebooks and monitors, in India," he added.

Chennai is the home constituency of India's communications and IT minister, Dayanidhi Maran. Several big technology companies have set up manufacturing facilities there, including mobile phone makers Nokia and Motorola. Tamil Nadu offers Dell access to a highly skilled workforce and a large base of customers, the company said.

Dell has other manufacturing facilities in Asia, in Penang, Malaysia, and Xiamen, China. Some of its competitors, such as Lenovo, have computer assembly operations in India.

The IDG News Service is a Network World affiliate.